Editor's note: During recent ATM card processing system failures, banks in America and abroad took to social media outlets to keep customers posted on developments and to allay their fears about account security. Both instances clearly demonstrate the important role that social media can play in the ATM channel.
But "social payments" are now starting to make news, as described in the following commentary originally published on our sister site, Mobile Payments Today. Will social media payments become yet another challenger to cash? Will they channel additional traffic to the ATM as consumers look to covert Facebook funds into currency? Or will they be just another "Farmville"-style fad?
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A year ago, I blogged about how banks and financial institutions like Amex were starting to experiment with social media (see "Banking on Social Media"), following consumers there, promoting their products and services and generally testing the waters. Now, banks have gone a step beyond: social payments.
In February of this year, Philippine telecommunications giant Globe Telecom offered its well-established GCASH mobile commerce service as an iPhone app that enables customers to send money not only to people in their phonebook but also to their email and Facebook contacts. In June, Poland's Alior Bank announced Alior Sync, a separate business and all-digital financial services firm, which offers Facebook-based payments. Social media and banking is now very real.
In the case of Alior customers, they can transfer money directly to friends on Facebook through the surprising channel of photos. Both senders and recipients must use the Alior Sync application. The payments are authorized with single-use codes sent via SMS and protected with captcha. Recipients can transfer the funds they collect to any bank account in Poland. Targeted at young, tech-savvy consumers, Alior Sync, unlike Globe Telecom, is actually relying on technology for all of its customer interactions. The digital bank has no physical branches; only a web-based, virtual branch with live "tellers" available for video, audio, or text chat to help customers do whatever they need to do, and mobile apps (Android and iOS) that provide basic services including balance and budget tracking, funds transfer, and invoice payment. Customers can also make PayPal payments through email.
ASB Bank in New Zealand originally broke Facebook ground in the fall of 2010 with its virtual branch, available from the bank's Facebook page. A number of agents are available via chat to answer questions from anyone who asks, ASB customer or not. Incidentally, ASB also recently launched a Facebook-friends payment service coming soon to its mobile app, which customers already use to send payments to anyone with an email or mobile number (similar to Commonwealth Bank Australia with its Kaching app.)
It's clear that banks are connecting to the Facebook Platform API and moving forward. What's not clear at this point is how consumers are going to respond. ASB's virtual branch has been popular, garnering thousands of "likes" and serving enough customers that the bank has kept it alive for going on two years. But, ASB is just answering questions, not handling financial transactions.
Currently banks look to be best positioned to be successful when it comes to payments. In a survey Sybase 365 conducted late last year, banks scored highest when it came to who consumers would prefer to provide a mobile payments service. (See "Mobile Consumers Trust in Banks.")
For that reason, it's interesting to me that banks are looking to use Facebook as their channel network. I like to see the innovation, and my wife and I are giving the Kaching app a try. I'm very curious to see how this will evolve over the coming year.
Michael Talbot is SVP of mobile commerce for Sybase 365, a subsidiary of Sybase, Inc. and provider of mobile information services like mobile messaging, commerce and marketing for mobile operators, financial institutions and enterprises.